Border tax adjustment: a feasible way to support stringent emission trading

Ismer, Roland; Neuhoff, Karsten

doi:10.1007/s10657-007-9032-8

Cited by 193 publications

(143 citation statements)

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“…It also offers different solutions on how to increase the number of signatories, to potentially converge to the grand coalition where all pollute the cooperative ideal level of pollution. 6 The main deficiencies of this article can also be seen as future opportunities.…”

Section: Discussionmentioning

confidence: 99%

“…The US, with the Waxman-Markey Bill, and the EU are currently contemplating the implementation of BTAs. 2 The legality of a BTA has always been subject of discussion, yet many believe that it does not go against WTO rules (see for example [6], [7], [8], [9]). [6] proposed that BTAs should be imposed under the best available technology (BAT) rule to be in accordance with WTO regulations.…”

Section: Introductionmentioning

confidence: 99%

“…2 The legality of a BTA has always been subject of discussion, yet many believe that it does not go against WTO rules (see for example [6], [7], [8], [9]). [6] proposed that BTAs should be imposed under the best available technology (BAT) rule to be in accordance with WTO regulations. Under this proposition, goods will be subject to the same "per unit" taxation level no matter the country in which they came from, thus simplifying greatly the informational requirements.…”

Section: Introductionmentioning

confidence: 99%

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Climate Coalitions and Punishments

Eyland¹

2017

TEL

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Studies that demonstrate that climate change is human induced are becoming more and more prevalent. Even though most world leaders are aware of this urgency and know that we must work at mitigating it quickly, little has been accomplished in terms of widespread participation in an International Environmental Agreement (IEA). The purpose of this paper is to create a link between studies on the use of border tax adjustments (BTAs) and coalition formation. The main contribution is that the punishment will be based on relative emissions between signatories and defectors. It is a structure that is more likely be accepted by the World Trade Organization (WTO) since it may be seen as fair due to the fact that if signatories and defectors emit the same amount of pollution then there will be no punishment. The main results indicate that this form of punishment may lead to small, partial, or full cooperation, depending on the parameter values. Additionally, at any equilibrium level, the signatories have a punishment structure that induces defectors to reduce their emissions by the same amount. In the end, this punishment may be seen as a credible threat because at equilibrium no punishment is imposed, yet if we remove the possibility of punishment it breaks down to a situation wherein no large coalitions are feasible.

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Climate Coalitions and Punishments

Eyland¹

2017

TEL

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“…From a global efficiency perspective such a combination qualifies as a secondbest measure complementing (unilateral) uniform emission pricing (Markusen, 1975;Hoel, 1991;Copeland, 1996). However, border carbon adjustments are quite controversial from the perspective of international trade agreements and their political feasibility (Cendra, 2006;Ismer et al, 2007). When border measures are unavailable, differential emission pricing in favour of domestic EITE industries including full exemptions may serve as an alternative protective measure (Hoel, 1996;Böhringer et al, 2014a).…”

Section: Literature Reviewmentioning

confidence: 99%

The efficiency cost of protective measures in climate policy

et al. 2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

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“…e.g. Ismer and Neuhoff 2007). Demailly and Quirion (2008a) also simulate a carbon tax in Annex I, with and without border adjustments, but this time in a global partial equilibrium model of the cement industry.…”

Section: Border Adjustmentsmentioning

confidence: 99%

Addressing leakage in the EU ETS: Border adjustment or output-based allocation?

Monjon

Quirion

2011

Ecological Economics

109

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The EU ETS has been criticised for threatening the competitiveness of European industry and generating carbon leakage, i.e. increasing foreign greenhouse gas emissions. Two main options have been put forward to tackle these concerns: border adjustments and output-based allocation, i.e. allocation of free allowances in proportion to current production. We compare various configurations of these two options, as well as a scenario with full auctioning and no border adjustment. Against this background, we develop a model of the main sectors covered by the EU ETS: electricity, steel, cement and aluminium. We conclude that the most efficient way to tackle leakage is auctioning with border adjustment, which generally induces a negative leakage (a spillover). Another relatively efficient policy is to combine auctioning in the electricity sector and output-based allocation in exposed industries, especially if free allowances are given both for direct and indirect emissions, i.e. those generated by the generation of the electricity consumed. Although output-based allocation is generally less effective than border adjustment to tackle leakage, it is more effective to mitigate production losses in the sectors affected by the ETS.Keywords : Emission trading, border adjustment, output-based allocation, competitiveness, carbon leakage. Limiter les fuites dans le système européen d'échange de quotas d'émission de gaz à effet deserre : ajustement aux frontières ou allocation basée sur la production courante ? RésuméLe système européen d'échange de quotas d'émission de gaz à effet de serre (GES) a été critiqué comme menaçant la compétitivité de l'industrie européenne et comme générant des fuites de carbone, c'est-à-dire une augmentation des émissions de GES à l'étranger. Principalement, deux options ont été avancées pour traiter ces problèmes : l'ajustement aux frontières et l'allocation basée sur la production, c'est-à-dire une allocation gratuite de permis proportionnelle à la production courante. Nous développons un modèle représentant les principaux secteurs inclus dans le système européen de quotas (électricité, acier, ciment et aluminium) et analysons plusieurs configurations de chacune de ces options, ainsi qu'un scénario avec enchères et sans ajustement aux frontières. Nous trouvons qu'une allocation par l'intermédiaire d'enchères, complétée par un ajustement aux frontières, permet de limiter le plus les fuites de carbone, voire de diminuer les émissions dans les pays hors UE27 (fuites négatives). Une autre politique relativement efficace est de combiner des enchères pour le secteur de l'électricité et une allocation basée sur la production pour les secteurs exposés aux fuites de carbone, en particulier si la quantité de permis distribuée tient compte des émissions directes et indirectes (liées à la génération de l'électricité consommée). Bien que cette dernière option soit généralement moins efficace qu'un ajustement aux frontières pour limiter les fuites de carbone, elle permet néanmoins de réduire les pertes de...

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Border tax adjustment: a feasible way to support stringent emission trading

Abstract: Border tax, Emission trading, WTO law, International trade, K32, K33, F18, H23,

Cited by 193 publications

References 24 publications

Climate Coalitions and Punishments

Climate Coalitions and Punishments

The efficiency cost of protective measures in climate policy

Addressing leakage in the EU ETS: Border adjustment or output-based allocation?

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